Stocks Start May on Positive Note

The Dow hits its highest level since late 2007 in intraday action and closes with a gain of nearly 70 points.

NEW YORK ( TheStreet) -- Stocks kicked off May on a strong note Tuesday, posting smart gains after a much better-than-expected report on U.S. manufacturing activity.

The Dow Jones Industrial Average rose 67 points, or 0.5%, to close at 13,280, after hitting an intra-day high of 13,338, levels not seen since late 2007. The S&P 500 gained 8 points, or 0.6%, to finish at 1406, and the Nasdaq added 4 points, or 0.1%, to close at 3050.

Shares of Bank of America climbed 2.5% to qualify as the Dow's biggest gainer. The bank is planning to cut 2,000 jobs in its investment banking and wealth management businesses, the Wall Street Journal reported.

Caterpillar ( CAT) and Pfizer ( PFE) were among the prominent losers on the Dow.

Shares of Pfizer ( PFE) slipped 0.6% after the drug giant reported first-quarter adjusted earnings of 58 cents a share on revenue of $15.4 billion; analysts were expecting earnings of 56 cents a share on revenue of $15.47 billion.

In the broad market, winners outpaced losers by nearly a 2-to-1 ratio on the New York Stock Exchange but breadth was negative on the Nasdaq, with losers outpacing winners by a small margin.

"The institutional players are very bullish about the market and retail investors are a little sheepish," says Kevin Mahn, chief investment officer of Hennion & Walsh Asset Management. "I think it comes down to data points. We'll see what the jobs report on Friday holds for us. One big surprise on either side could make the difference."

Stocks finished modestly lower Monday, marking the first monthly decline for the S&P 500 and Nasdaq in 2012, as shaky U.S. economic data dominated the headlines.

The mood changed though after the Institute for Supply Management reported that its index on U.S. manufacturing activity rose to 54.8 in April from 53.4 in March. It was the best read since last June. Economists surveyed by Thomson Reuters expected the index slipped to 53. A reading of more than 50 indicates growth in activity.

"That the ISM was able to push higher by 1.4 points is incredibly encouraging especially in light of slowing PMIs in several other countries," says BTIG chief global strategist, Dan Greenhaus.